F E B R U A R Y 1 9 6 0
by Archibald Cox
THE steel strike has precipitated a demand for new legislation providing a better solution to labor disputes which endanger the nation. With the settlement of the steel strike, the pressure will ease, yet we should not put our heads back in the sand. Emergency disputes will continue to press upon us.
In twelve years, the emergency-disputes provisions of the Taft-Hartley Act have been invoked on sixteen occasions. Since World War II, there have been five major steel strikes. Two nationwide railroad strikes were averted by drastic presidential intervention after the machinery of the Railway Labor Act had been exhausted, and a more serious dispute in the railroads now looms over the horizon. East Coast shipping has been tied up five times during this same period. The country has survived each apparent crisis without a catastrophe. But even in management circles, there is wide agreement that the emergency provisions of the Taft-Hartley Act are inadequate.
The boards of inquiry, which are charged with reporting the facts to the President before he seeks an injunction and again after sixty days, have sometimes engaged in useful mediation, but they can do no more. The injunction may forestall calamity by keeping the wheels of industry turning for an additional eighty days. It can take the leadership off the hook if management or union blunders into an unwanted strike, or if the rank and file compels union officials to sanction a strike against their better judgment.
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In the typical case, however, the injunction simply postpones the showdown by
relieving both employer and employees of the necessity to bring about a
settlement. For example, the steel companies would surely have felt more
pressure to make concessions if they had not known that they could renew
operations under an injunction. Employees grow more obstinate when put back to
work under a court decree. All the disputes handled under the Taft-Hartley
procedure, except two, have been settled either at the outset or after the
injunction was lifted and the renewal of the strike brought about a negotiated
It is sometimes said that the real pressure for a settlement under the Taft-Hartley Act comes from the balloting which the government conducts upon the employer's last offer of settlement. A vote to accept the offer puts irresistible pressure upon the union leaders, but the evidence available shows that the employees almost always support their leaders and vote to strike. The political strategy of the referendum distracts both sides, but especially the union leaders, from collective bargaining, just when negotiations are most important. The future, if not the existence, of the union is at stake. The resulting emotionalism, particularly if there is a big vote against the company's offer, may make it even harder for the union leaders to make the necessary concessions. In canvassing the alternatives to the Taft-Hartley Act we must keep in mind the dilemma which confronts us. All of us desire three things, with varying degrees of emphasis: to preserve an economic system in which wages and conditions of employment are fixed by private contract rather than government regulation; to give employees effective bargaining power through unions of their choosing; and to avoid interruption of operations in a business essential to the national health or safety.
It is impossible to pursue all three objectives to complete satisfaction. We can avoid government regulation and prevent strikes -- at least in theory -- if we are willing to turn over to management the exclusive power to fix wages and conditions of employment. Yet a strike is the only effective way for employees to exercise bargaining power, for it is nonsense to talk about 200,000 coal miners or 300,000 steelworkers individually bargaining with their employers. Theoretically, we can eliminate strikes and safeguard the interests of both employers and employees by substituting compulsory arbitration or government regulation, or we can have free collective bargaining and suffer the interruptions which threaten the national welfare. The legislator's task will be to find the workable accommodation which will bring the largest measure of satisfaction in terms of all three objectives, even though a bit of each must be sacrificed in order to attain the others.
One rather popular solution calls for removing the immunity which labor unions enjoy under the antitrust laws. The Sherman Act was applied to unions from 1890 until 1940, but only to formulate judicial policies for preventing strikes and boycotts which the courts regarded as unjustifiable interference with an employer's business. Even in suits filed by the Department of Justice the courts were not concerned with the size of unions or their monopolistic power.
There is nothing in experience to indicate how the Sherman Act can be used effectively to prevent the growth of excessive union power or to avoid the conditions giving rise to emergency disputes. Indeed, the basic theory and concepts of the antitrust laws are inapplicable to labor unions. The antitrust laws are designed to ensure free markets by preserving and enforcing competition among a sufficient number of sellers of goods and services having such equal power as to prevent any one of them from controlling prices, supplies, or quality to the detriment of consumers. But labor unions do not compete against one another in the sale of labor.
The Hartley Bill and Ball Amendment of 1947 proposed to eliminate "industry-wide bargaining" (a misnomer for industry-wide unionization) by confining the bargaining rights of each union to a single employee and then forbidding the several company-wide unions to combine or conspire by coordinating their negotiations either directly or through an international union. In the automobile industry, there would be one union for Ford, one for General Motors, one for Chrysler, and one for each of the smaller companies. The same pattern would be enforced throughout the economy with a possible exception for very small firms in a single industrial area, such as the garment shops in New York City.
Obviously this proposal would provide no safeguard against a national emergency dispute arising at a single plant. In 1952-1953, a strike at one plant of American Locomotive Company cut off the entire supply of nickel alloy pipe used in the gaseous diffusion plants of the Atomic Energy Commission. In 1952, North American Aviation Company was the only producer of jet airplanes needed in the Korean conflict.
Breaking up the international unions would hardly affect the course of negotiations in the oligopolistic industries, such as the producers of steel, automobiles, and copper. One could hardly expect each company-wide union to negotiate without an eye upon the others; the companies do not make prices in that fashion. The decentralized negotiations last winter between the major airlines and bargaining committees from the various International Machinists Association locals, which made their own decisions, resulted in a succession of strikes as each company-wide group sought to leapfrog to a higher wage than that of the preceding settlement. The aluminum, aircraft, and lumber industries, where there have been rival unions, have felt the same wage pressures as if they were dealing with one union.
In an industry where the firms are smaller, to break the labor union into company fragments, each of which is forbidden to bargain in consultation with another fragment or a parent international, would affect the course of collective bargaining by weakening the labor unions and destroying a great many. The employees of a single company are too small a unit to support the experienced officials and professional staff required to negotiate and administer contracts effectively. But these are not the industries in which the inflationary wage pressures are serious, nor, except for coal mining, do they experience national emergency disputes. The great vice of the proposed antitrust weapon, therefore, is that it would kill and maim innocent bystanders while leaving the ostensible targets unaffected.
Even if such a program were theoretically sound, it is impractical. A program of breaking up labor organizations could not succeed without a vigorous effort to break up giant corporations too. We cannot turn back the clock.
Many students of industrial relations are now convinced that the best hope for avoiding national emergency strikes, while preserving a large measure of freedom and private responsibility for the terms of the settlement, lies in legislation which opens the door to a wide choice of procedures. I favor this method, but would divide it into two parts: industry procedures and government procedures.
Each industry in which a labor dispute might affect the national health or safety should be admonished by law to create a standing procedure for resolving disputes which will not yield to the ordinary processes of negotiation. This procedure would include private mediation, fact-finding with or without recommendations, voluntary arbitration, or reference to a permanent bipartite board with power to decide by a stipulated majority. There are endless possibilities. The essential points are: first, that it be a standing procedure which survives the termination of regular collective bargaining agreements; second, that it come into play at an early stage in negotiations before positions have hardened; and third, that it give reasonable assurance of avoiding an emergency. The Railway Labor Act should continue to provide the machinery for the railways and airlines until modified, but they should be brought under the second stage of the choice-of-procedures plan.
Experience under the Railway Labor Act, despite recent failures, and in atomic energy installations seems to show that the best settlement procedures are those devised for a particular industry by its own management and labor, taking into account its peculiar background, technology, customs, and needs. The central issues in labor relations have become too complicated to be resolved by splitting the last nickel or finding a happy formula under pressure of a crisis. Consider, for example, the complexities of increasing industrial productivity by electronic devices or atomic energy with adequate provision for human costs and a just allocation of the monetary savings. Reaching a settlement of the work rules issue on the railroads will require complete revision of an elaborate structure, including methods of wage payment, which dates back to 1920.
The new statute should provide that, upon request of the industry or a recommendation by the Secretary of Labor, the President should appoint a board of public responsibility, chosen from men of experience and high standing in the field of industrial relations, who would serve as the occasion required. Such a board should have two duties: to assist the industry in setting up its own procedure and to serve the functions of an industry procedure whenever there is none. Except for this and the normal work of the Federal Mediation and Conciliation Service, the government should not be brought into the first stage of the procedure.
Notwithstanding the industry procedures, there will always be some critical disputes. There should, therefore, be established by statute a National Emergency Disputes Board, which the President would summon and consult whenever the Secretary of Labor certified the existence of an unresolved dispute which he considered an imminent threat to the national health or safety. The board should be composed of the Secretaries of Defense, of Commerce, and of Labor, and two eminent citizens, one with a background in management and the other from labor, neither of whom is currently associated with parties to the controversy. Clinton Golden and Sidney Weinburg illustrate the type of man required.
The National Emergency Disputes Board should have three functions: first, to arrange a settlement, if possible, or a method of obtaining a settlement without the cessation of normal operations; second, to make all possible arrangements for protecting the national interest in the event of a strike or lockout; and third, to hear the parties and advise the President upon the single question of whether a strike or lockout would do immediate harm to the national health or safety. The hearing not only would deter hasty government action but also would focus public pressure upon the parties.
If the President finds after studying the report of the Emergency Disputes Board that an emergency is imminent, he should have statutory authority to follow five courses of action, singly, consecutively, concurrently, or in any sequence:
1. He might appoint a fact-finding board with power to mediate and also to make public recommendations for the settlement of the dispute.
2. A board of inquiry might be appointed for the purpose of arranging voluntary arbitration, or, if this fails, reporting to the public the blame for imperiling the national health or safety.
3. Since an injunction may be the only way to stop a strike, the statute should authorize the President to obtain an injunction for as long as six months. The public health and safety are more important than the rights of either party.
4. The President should also have power to seize and operate the industrial property affected by the dispute. Such a step would be as distasteful to employers as are injunctions to unions, but the very aim is to make presidential intervention objectionable to both. Since strikes would be forbidden during the period of government operation, the President should be authorized, but not required, to appoint an adjustment board to recommend any changes in wages and conditions of employment for the period of government operation. The parties would be under heavy pressure to adopt these interim conditions as the terms of the final settlement in order to terminate the seizure, but the appearance and some of the reality of voluntary action would be preserved. The pressure is less than under compulsory arbitration, which I reject, even as an available procedure, upon the ground that it would too easily become the normal course.
In Massachusetts the employer may elect either to allow the Commonwealth to operate the business for his financial account or else to sue for just compensation, the measure of which would presumably include an allowance for the employer's inability to use the strike-bound property. This method of financial adjustment seems to have worked pretty well, but I am inclined to think that the government should also have the right to elect to pay only just compensation; otherwise, seizure might become a sham, a method of breaking a strike without disturbing the management's control or the owner's profits.
The act of seizure is a drastic measure, but it is not a novel remedy. Its use by the federal government began in 1918. It was fairly common in World War II. Several states, notably Massachusetts and Missouri, have seizure statutes. When a business becomes financially insolvent, an equity or bankruptcy court may assume possession and operate the business for the benefit of interested persons. Seizure is little more than an executive receivership imposed because the company and union are insolvent in their labor relations.
5. Finally, the President should be given his most important power in explicit terms -- the power to do nothing. Sometimes the parties negotiate agreements very promptly after they are convinced that no one else will carry the burden.
In academic discourse it is easy to argue that the country has never faced a true emergency as a result of a peacetime strike, that the President has ample constitutional authority to deal with a crisis, and that we can best preserve collective bargaining by repealing all legislation applicable to emergency disputes. In my opinion, muddling through will not meet the challenges of the atomic age and space exploration.
The flexibility of the choice-of-procedures approach is an important asset, but its chief advantage over other solutions to the problem of national emergency disputes lies in the capacity for preserving uncertainty as to the form and extent of government intervention. Any set course of procedures enters into the calculations on both sides, with the result that their negotiations tend to run the full course before the parties buckle down to business. This weakness has frequently developed under the Railway Labor and Taft-Hartley acts; the 1950 coal strike is a good illustration, and history may record the recent steel strike as another. In ordinary labor negotiations, the risks and costs of a strike are among the most powerful factors in bringing about an agreement. The choice-of-procedures approach creates new uncertainties. Some alternatives would be objectionable to employers, others to unions. The stage would be set for active mediation in which the President or his representative would not hesitate to influence the substance of the bargaining nor to remind both sides that his choice of a procedure in the event of continued disagreement might be influenced by his judgment that either party was unreasonable. Thus armed with a variety of weapons, the Chief Executive would probably be spared the use of any.
The policy of the Eisenhower Administration has been to avoid government interference with collective bargaining. My suggestions go so far in the other direction that some may suggest that it would be better to formalize the government's responsibility by establishing a labor court or wage regulation board. Space prevents more than two short observations upon the point.
First, I am convinced that during the next ten or twenty years, in an age in which international tensions, the challenge of space exploration, and an exploding population strain the productive capacity of our economy, we will be unable to ignore the public interest in the substance of collective bargaining agreements. The problems of inflation and automation are only two examples.
Second, there is a vast difference between compulsory arbitration or a labor court or a government wage board and government participation through mediation or fact-finding. The former involve adjudication or regulation supported by legal sanctions. When the government participates through mediation, its representatives may persuade, cajole, and even threaten, but in the end they must secure agreement without the power to command. Thus, the suggested techniques preserve the challenge to creativity presented by the necessity for securing common consent.
A professor at the Harvard Law School, who was admitted to the Massachusetts Bar in 1937 and who has been increasingly interested in matters of labor relations, Archibald Cox served as chairman of the Wage Stabilization Board in 1952. More recently he was a consultant to Senator John F. Kennedy in the preparation of the controversial Kennedy-Ives labor bill.
Copyright © 1960 by Archibald Cox. All rights reserved.
The Atlantic Monthly; February, 1960; Strikes and the Public Interest; Volume 205, No. 2; pages 48-51